Asian-Pacific indices end mixed

European stock indices were surprisingly robust in early trade on Tuesday. All the major regional indices, including the UK’s FTSE 100, built on gains made yesterday. These, in turn, came as US stock indices bounced off their overnight lows after President Trump pulled back from his threat to launch a fresh attack on Iran, thereby breaking the ceasefire, now in its sixth week.

Source: TN Trader

The news helped to steady investor sentiment. This was helped after Mr Trump claimed that negotiations with Tehran were ongoing and that he was hopeful of reaching an agreement.

In the UK, the Unemployment Rate rose to 5% in the three months to March, slightly above expectations, and the prior reading of 4.9%. Three-month Average Earnings rose 4.1% year-on-year, well above the 3.8% expected. Analysts expect the war between the US and Iran to keep energy prices elevated, and this is likely to dampen economic activity and put downside pressure on UK growth.

That should make life difficult for both the Government and the Bank of England. Given the sharp uptick in UK inflation, the Bank will want to look at raising interest rates. But it won’t want to make economic conditions even tougher than they are already, and risk a downturn in GDP and a jump in unemployment.

US stock index futures were lower across the board on Tuesday morning, aping the moves seen in early trade yesterday. This followed on from a large risk-off move on Friday, which saw investors trim their long side exposure going into the weekend. The catalyst for this move was the sharp rise in US Treasury yields seen recently.

Source: TN Trader

The surge in oil prices, which came in response to the US/Israeli attack on Iran at the end of February, has shown little sign of retreating. Front-month Brent and WTI remain significantly above $100 per barrel, and this is feeding through into inflation numbers.

Last week, both the CPI and PPI came in hotter-than-expected. This has seen the yield on the 10-year Treasury note break above 4.60%, hitting its highest level since February 2025. Bear in mind that this key yield was below 4.0% in February this year and stood at 4.25% this time last month.

The tech sector, and semiconductors in particular, were hit hard in early trade today. Investors weighed concerns over higher bond yields, as well as the outlook for AI demand and rising layoffs across tech. Of course, this could be simply some mild profit-taking given the outsized gains in chipmakers since the end of March.

US stock index futures were also weak in early trade yesterday. But all the major indices bounced off their lows to end with modest losses, while the Dow edged into positive territory. It’s worth noting that the US dollar is still in demand, helped along by an increased possibility that the US Federal Reserve, under its new Chair, Kevin Warsh, may have to raise rates rather than cut them, before the year-end. The President will be pleased!

Meanwhile, tomorrow could be a big day, as NVIDIA releases its earnings after the close, and on the hopes that SpaceX may release its IPO prospectus.

The US dollar was stronger across the board this morning. It was fortunate to be in demand on the back of rising US Treasury yields. The oil price remains elevated, and this is feeding through into inflation numbers around the globe. But the dollar remains top dog as traders price in an increased possibility that the Federal Reserve may keep interest rates unchanged this year or even nudge them higher.

Investors are keeping an eye on the new Fed Chair, Kevin Warsh. They want to see evidence that the Federal Reserve remains ‘politically independent’ (inasmuch as it has ever been) and focused on its dual mandate of ensuring price stability and maintaining full employment, no matter what pressures come from the White House. The cash Dollar Index traded either side of 99.00, having rebounded after posting a modest loss in the previous session.

Meanwhile, the USD/JPY pushed back above 159.00. It is coming perilously close to levels which triggered intervention from Japanese policymakers to support the yen at the end of April. The British pound gave back some of yesterday’s gains versus the dollar. But it remains under pressure given the parlous and uncertain state of its political leadership.

Source: TN Trader

In the early hours of yesterday morning, gold broke below $4,500 to hit its lowest level since the end of March. It subsequently recovered and looked on course to recapture $4,600. But it ran out of puff, and today it has given back all of Monday’s gains.

Source: TN Trader

The precious metal continues to struggle to find a footing in the face of higher US Treasury yields and dollar strength. It was helped yesterday after President Trump was persuaded to call off an attack on Iran, which would have broken the current ceasefire, which has just about held since early April.

Leaders of the senior Gulf States were able to persuade President Trump that, behind the scenes, Tehran was negotiating in good faith. Meanwhile, the oil price remains elevated, and inflation is once again taking hold across the world.

Silver also moved lower after posting decent gains yesterday. As with gold, investors cut their long positions or established fresh shorts, as the US dollar rallied on safe-haven demand and higher Treasury yields.

Source: TN Trader

Oil prices were little changed this morning following a volatile session on Monday. Prices spiked higher after the weekend break on fears that President Trump was about to break the ceasefire with Iran. He threatened to unleash an attack designed to bring leaders in Tehran back to the negotiating table after a long break from initial negotiations, which took place in early April, and which led to the current ceasefire.

But prices pulled back after Saudi Arabia, Qatar and the United Arab Emirates persuaded the Trump administration that Iran was negotiating quietly, and in good faith. Despite this, the standoff continues, and the oil price has crept up.

The Strait of Hormuz remains effectively shut and controlled by Iran, and this is starting to have serious implications for the global supply of crude oil, liquefied natural gas, fertilisers, helium and other vital chemicals. Meanwhile, the US continues to blockade Iranian ports in the region.

The bottom line is that there are a few indications that anything is going to improve in the near-term. Yet that is not the view of oil traders. Brent forward contracts continue to trade with a steep backwardation. This implies that any near-term supply shortages will disappear over the next few months, with the price of Brent forecast to be around $30 per barrel cheaper than the current spot rate.

Source: TN Trader

Yesterday afternoon, Bitcoin dropped to its lowest level since the end of April. The latest part of the Bitcoin pullback came after some bellicose statements from President Trump directed at Iran. These suggested that the US was preparing for another large-scale attack on the country in response to a complete lack of progress in moving towards another round of peace talks.

But Mr Trump backed away from his threat, crediting conversations with the leaders of Saudi Arabia, the United Arab Emirates and Qatar, which convinced him that Tehran was already engaging in constructive negotiations. This saw oil prices retreat, while other risk assets steadied after a weak start on Monday.

Bitcoin had fallen around 7% from the highs of just under a fortnight ago, when it came close to $83,000, to yesterday’s low. It has recovered a touch since then. If it continues to hold above $75,000, then it looks as if the selloff, which began just over a week ago, may simply be a healthy period of consolidation which is helping the daily MACD to pull back from slightly overbought levels.

Markets remain largely headline-driven as investors attempt to navigate a difficult mix of geopolitical uncertainty, elevated oil prices, stubborn inflation pressures and shifting central bank expectations. Despite this, the VIX remains relatively subdued even as traders continue reacting sharply to developments surrounding the Middle East conflict and US-Iran negotiations.

Attention now shifts to Nvidia’s earnings report after Wednesday’s close. This remains one of the most important events for broader market sentiment, given the dominance of artificial intelligence-related stocks in driving recent equity gains. Despite the risks, US equity markets continue trading near record highs, highlighting the ongoing tension between strong market momentum and an increasingly uncertain macroeconomic backdrop.